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Better or cheaper public transport?

By Matt L, on March 27th, 2014

With the great news that the Hop Card has finally been fully implemented, attention now turns to complementing integrated ticketing with integrated fares. Integrated fares is all about ensuring that you pay the same amount for a trip from A to B regardless of how you got there: a single bus, bus & train combination or whatever. The Regional Public Transport Plan indicates that Auckland Transport want to implement integrated fares through a zone based fare system – with latest board reports noting a couple of options still being analysed.

With my trying out of various options to get to and from Takapuna it has also highlighted just how important integrated fares are. With HOP to go via the 130 bus like I described yesterday it cost me $5.04. By comparison to catch a train to town and then get a bus to Takapuna – a journey that takes about the same length of time but doesn’t feel like it due to at least feeling like you are moving – costs $8.68. That’s a difference of $3.64 just to get to the same location. Even worse another bus I accidentally tried from town to Takapuna (which I will discuss in a separate post) cost a grand total of $9.67. That’s three completely different costs to go between the same two locations.

The fare zones originally proposed in the draft Regional Public Transport Plan looked at using geographic boundaries largely reminiscent of the old council areas however that didn’t receive a lot of support and sent AT back to the drawing board. The latest board report suggests that AT are looking at two different concentric zone models like this one from a survey in August last year which I understand was much preferred over the geographic boundary option.

In Wednesday’s NZ Herald, Auckland Transport chairman Lester Levy discusses the potential for the integrated fares system to result in cheaper travel on public transport:

Aucklanders are being offered hope of cheaper public transport now introduction of the region’s $100 million electronic ticketing scheme is complete.

A report that Auckland Transport chairman Lester Levy expects will recommend lower fares to help meet ambitious patronage targets is due before his council body’s board in two months…

…Dr Levy told the Herald after yesterday’s meeting that the card was a stepping stone to a simpler fare structure, which he hoped would give passengers cheaper trips.

The prospect of cheaper public transport is obviously appealing in some respects – and perhaps for some people the cost of public transport is what stops them from using the system. For most people though, I think the bigger issue is simply the usefulness of the system. When the system is full of routes like the stupid 130 that I talked about yesterday and/or routes with such low frequency meaning you have to plan your life around a bus timetable then no amount of price reductions is going to get lots more people using services.

Furthermore in the past I’ve looked into a number of Canadian and Australian cities and interestingly despite different fare structures and prices, the average fare paid by passengers is actually very similar to that in Auckland. These cities have much higher patronage than Auckland and some of the key reasons are the more developed Rapid Transit services and the connective bus networks. In other words they have developed a higher quality PT network and people are prepared to pay to use that.

There has also been some interesting research into this area by the NZTA. For example this paper found that while fares did play an important part, service was the key driving factor for patronage while this one notes that initiatives like free transfers, ticket promotions, improvements to hours and better timetables may have had a profound impact on patronage.

In saying all of this, I do think it’s possible that cleverly lowering some fares might lead to patronage growth significant enough to more than make up for the loss of per passenger revenue – particularly during off-peak periods where spare capacity already exists on many services.

However, clearly any reduction in fares that leads to a requirement for more operating subsidy is potentially taking money away from where it could otherwise be used – particularly in two areas:

Improving service frequency. The flip-side of this is that any lowering of revenue from PT fares could necessitate cutting of services to fund the extra subsidy requirement – which would be a pretty crazy thing to do if patronage increases.

Investing the money in infrastructure improvements to make public transport more attractive by being faster, more reliable or with higher quality facilities.

Obviously there’s the potential for money to be redirected away from building unnecessary motorway projects and into lowering PT fares, but one suspects that would require a change of government to occur.

All of the above doesn’t mean it’s impossible for Auckland Transport to change the way it prices public transport to be more attractive and offer better value for money. A few suggestions for how fares should be improved while not necessarily breaking the bank are:

Fixing up fare irregularities like mentioned in my example to Takapuna

While average fares are similar, compared to overseas cities, fares for short trips in Auckland are unusually low while fares for longer trips are unusually high. This could be redressed – although perhaps not to the extent of Melbourne’s flat fare proposal – in a way that’s ‘revenue neutral’.

As already mentioned, fares for off-peak travel could be lowered to ‘smooth out’ peaks in demand that require very expensive peak services to be operated.

The price difference between cash fares and Hop Card fares could be substantially increased to encourage greater use of Hop (which means faster boarding times and a more efficient system).

Monthly passes could be made more price attractive, to encourage higher levels of PT use by existing users.

As Jarrett Walker often mentions, every public transport user benefits from better public transport and improved public transport makes it more likely for anyone to use the system. Cheaper fares, particularly if achieved in a way that comes at the cost of lower overall revenue, only help a much smaller section of society and therefore are less likely to boost public transport use than improving service through bumping up frequencies or building better infrastructure.

Ultimately I think we have an important choice to make, do we choose between better or cheaper public transport. Personally I would rather a better quality service but I realise not everyone will agree.

64 comments to Better or cheaper public transport?

If the service is poor, then you could provide public transport for free and it *still* wouldn’t be used. OTOH If people could see that they were getting quality for their money, especially higher frequencies, they would be more prepared to spend it. I’m with Matt on this one – the price/quality tradeoff needs more attention.

Err no. The point is that if your main drive is to make fares as cheap as possible then the quality of your service suffers (because you have less money coming in). If the quality is low then people who have a choice will avoid it.

Look at it this way. For a lot of people driving to work is more expensive than taking PT already. Making it even cheaper isn’t going to attract most of them them, they will be attracted by a better ( more frequent, quicker, nice and clean bus ) service.

Indeed, to take this to the extreme we could make buses free in Auckland on the existing g budget if we halved the amount of service (given that it’s about 50/50 on fare revenue and ratepayer subsidy). But that would mean dumping half the peak routes and running the rest of the network at half frequency, which in most cases means one bus every two hours.

I would say that would mean far less people using PT and far less value for the city.

I don’t really understand why zones are necessary at all now that we have HOP – the card knows when you get on and when you get off – so why can’t it charge you per KM (+flagfall, like a taxi does)? Are zones designed to make the system easy for newbies to understand what their trip might cost? You can easily find that information by swiping at a terminal and entering your origin & destination (or check the website).
It just doesn’t make any sense that going from Titirangi to Albany (35km in same zone) might cost less than going from Grey Lynn to Ponsonby (500m, two zones). Unless I’m misunderstanding everything here, it seems that this zone map has been designed to suit the routine, long-distance CBD commuter…the exact group who would understand journey pricing regardless of any simplified zone system.

Ak-Sam – I was also wondering why it has to be a zonal system and whether other options have been fully evaluated.
I’m going to Amsterdam this year and they have a card using the system below:
-a base rate charge (could be compared to a taxi flagfall)
-a per km charge on top of that
-if you tag on to another bus/tram/metro within 35 minutes of the previous one, there is no extra base rate charge, hence allowing for free transfers

There are a variety of discounts/season tickets that can be loaded on the the card for particularly frequent travellers.

For cash users, there is a one hour ticket or an all day ticket.

I think this could work for Auckland. Although a one hour ticket might be a bit short for Auckland’s larger area.

I think in practice the latter would sit within an overlap and only cost the single zone fare.

Plus in the former, you might do the whole thing staying in one zone, but you might also find it easier to go via the city which would be a three zone fare.

I’ve got no problem with the effective outcome of long crosstown trips being cheaper relative to radial trips. That’s a feature of the system in my view. You can charge a bit more one radial trips where people get the most value (avoiding congestion and parking costs) and where they have a high willingness to pay as a result, and charge less on trips where parking and traffic aren’t much of an issue, where driving is comparatively easy and where people have a low willingness to pay.

There are three problems with purely distance based fares in my opinion:

1) it’s hard to know what the fare for a trip will be in advance of taking it. That’s a barrier to using PT for varied general travel as opposed to a single regular commute.

2) You get penalised under a connective network if your transfer points happen to be off your direct line of travel, even if that trip is an efficient use of the network in general. That means feeder trips that go sideways to a rapid transit station will cost more than a point to point bus, despite having the same end points.

3) this is the biggie in my opinion: you charge exactly the same rate for every trip a person makes, regardless of the destination, the utility of that trip to the user, and how many trips they have already made. In economist terms the marginal cost is equal to the initial cost and the average cost, even though the cost of delivering the marginal trip is low (and frequently the marginal value to the user is low too).

With a zone model, you can charge people full price for the first trip they need to make and give them subsequent trips at little or no extra charge. So basically you pay full price for peak commuter trips and get offpeak stuff for free. The point being that you encourage people who have already paid to use PT to fill up off peak and counter peak services at no extra charge, for trips that they aren’t particularly willing to pay full price for. The zone and time is needed to keep things relatively fair.

With distance based every extra trip a person takes costs the same as the first one. You can reward repeat users and encourage them to fill up off peak services with a cap system, but it’s hard to set useful caps without zones (a cap tuned to the full extent of the network isn’t much use to most people).

1) Not really an issue these days with smart phones, internet, electronic route maps and ticketing machines.
2) What if the electronic system took account of backtracking – There’s no reason it couldn’t calculate a reasonable fare for your journey, maybe giving you a discount for the sideways/backtrack bit? Similarly it could increase the fare if you cross the CBD instead of going around it – Smart technology allows for dynamic pricing like that.
3) Isn’t this solved by flag falls and peak/offpeak pricing? Cellphone companies have some fairly complex pricing structures with weekend/off peak specials and quotas. The Per KM charge could start off higher, then decrease the longer your trip gets – so a 30km trip would average less cost per KM than a 3km trip. Again, smart & dynamic pricing would be fairer than a fairly arbritary ‘zone boundary’.

Ultimately I don’t think we want a situation where crossing a zone boundary is a major penalty. Applying constraints like that can happen one the PT system is nearing capacity; then its a supply/demand situation. Right now there’s little relationship between bus fares and, for example, car park building pricing/availability, so the market isn’t functioning properly.

1) It is for my mother! It effectively says you need to sit down with a computer of some kind to input a proposed route to work out the price of the product in advance. That would stop my mother using it for the technological reasons, while my brother would say “meh can’t be arsed”. Not hard for me with an ipad glued to my hand and a geeky desire to optimise transit trips, but for many that will put the handbrake on spontaneous trips and using the PT network to get around the way they would in a car.

2) It could, if it can make decisions about what constitutes one trip and what is a series of trips, or indeed what counts as backtracking. Your suggestion sounds very, very complex, and is aligned to the sort of network where people might go to the effort to work out the details for one regular commute trip but have a big barrier to doing it again and again for any other spontaneous trips they might do.

3) No flag falls make it more expensive to do marginal trips, not the opposite. That would, for example, cost me more to stop off halfway to pick up my drycleaning than if I just went right through. Yes off peak pricing and weekend quotas is one way to approach it, along with various other discounts and complexities. I don’t agree with you on cellphone companies pricing either, almost all post pay and prepay pricing these days are done in bundles. Effectively you pick from a small group of pricing plans to get all the texts, minutes and data you need. That’s very similar to a zone model, you buy in to a bundle of unlimited travel within a zone/time block. One question is do we want ‘fairer’ where everyone pays exactly this or that, or do we want ‘useful’ where it is all very quick, simple and straightforward for anyone to use, where nobody gets stung by an outrageous fare, but also where people are encouraged to use PT more often and as regular travel for all sorts of trip types?

I’m not sold of off peak discounts and quotas and the like because it makes assumptions about what people are and aren’t willing to pay full price for. The beauty of pass for unlimited travel within a zone and time is that you intrinsically charge people full price for the trips that they are willing to pay for, and give them further trips that they aren’t willing to pay for at no extra cost… regardless of when that happens to occur for each person. So it’s the same if you start work at 2pm, or if your need to travel is to get to an appointment on a Sunday morning. You pay for the trip you need to make regardless of when or where it is, then get bonus travel regardless of when that happens to occur.

The zone boundary thing is a red herring, all zone systems solve this by overlapping zones at the boundary where they don’t fall on a very clear geographic barrier already.. The map above doesn’t show that properly in my opinion, the overlap should happen at all boundaries, not just the nominated town centres. Auckland has some pretty clear and obvious geographic barriers, certainly not arbitrary, so it’s a very small issue. It is a very lucky situation that the harbour inlets seem to perfectly line up with 10km bands around the CBD! Another simple way to do it is to set a lower cap, say any trip under 3km in length is only charged at the one zone fare even if it happens to cross right across a zone boundary.

I see the two approaches as having two different goals. Distance based pricing is about being precise in charging people exactly for the amount of seat-kilometres they consume, regardless of the demand, desire and negative or positive outcomes (although targeted discounts and time pricing etc can shape and modify that). It’s good for ‘price fairness’ if fairness is your goal.

Zone and time pricing is about charging people a fair amount, on the whole, but giving them abundant access and freedom to use the network as a network in a very simple and legible way. By charging full price for the trip people need to take and giving them other trips at no extra charge you get more bums on seats. It’s basically a very easy way to fill up services across the network with no extra costs. Or in other words, if the goal is to maximise positive externalities under a given budget of service then charging people full price for each marginal trip wouldn’t be a very effective strategy.

In my opinion the goal in Auckland should be to have a fair but simple fare system that encourages people to use PT as much as possible, particularly those that don’t currently use it for whatever reason, and in particular one that encourages people to use it freely in a hop on hop off manner to all sorts of places and times, rather than sticking to just the narrow range of trips where they have a high willingness to pay. Trying to be extremely precise with distance pricing up front then adding in a suite of discounts and quotas after the fact will just make it to complex and confusing for most people.

The big problem with any system containing a small number of discrete ‘zones’ or ‘stages’ is that it strongly incentivises catching public transport just within the boundary. Witness, for example, the large number of commuters who travel to the one-stage boundary by private vehicle and then take the bus. Surely it’s possible to have a fairer, more continuous fare system without too much complexity.

For example, take the current stage system. Hop card users could get a discount based on “how much” of the stage they actual use, e.g. a single stop into the next zone might only cost 10% of the stage. For simplicity, the full stage charge would apply for cash fares. Also, the stage boundaries provide a quick indication of the maximum charge for the trip without needing a computer or smartphone to work out the exact fare.

Fast, regular, reliable service every time. On Tuesday at Oneroa I had the choice of waiting 55 minutes for a bus or go by taxi and pay $15.00. I chose the cab.
These grand visions and schemes are obviously necessary for the future but to make the present system work, the existing transport network desperately needs ‘tweaking’ and it wouldn’t cost all that much. My pet peeves are buses that seem to aimlessly wander around in circles with no destination, lack of feeder services to the trains and the Northern Busway. Packed weekend buses working to a much reduced weekend schedule. Lack of any late evening services making a visit to a show, cinema or restaurant in the city impossible. Private company vehicles that are way past their useby date, (I would cancel their licenses) and some of the destination signs are obviously designed to create havoc especially for passengers unfamiliar with the service. None of this is rocket science but city transport planners need to get out of the era of trams and horse buses.

But maybe the trip via the city should cost more as it goes via the CBD. Kind of like a congestion charge. From memory the most expensive zone in London is Zone 1 so if you could avoid that zone, you saved lots of month (on a monthly pass anyway)

I haven’t thought this though, just putting it out there. Of course, since they are favouring a hub and spoke approach, it probably wont work and your situation (two completely different ways to go) is probably reasonalby unique.

I agree, that’s why I like that small city zone in the image above, it clips the ticket on trips to or through the CBD (which is most congested, yet has the best service) so that trips elsewhere can be a bit cheaper.

If the service to the NW from the Northern Busway was any good then this wouldn’t be an issue as it would be the most likely service used. However, as Matt has pointed out the service is crap. I’ll happily pay the extra to use the NEX to the CBD and then the train to Henderson (as I did for a few days last month). It added 15 just minutes to my commute from Orewa and was comfortable. To take the NW bus was going to take much longer, and I wouldn’t think it would be as comfy as the NEX. The sooner there is a busway from Constellation to Westgate and then on down the NW, the better.

Indeed. And it’s not like people get to choose the route their service takes. If they want to get from, say, Otahuhu to Birkenhead (or pick any two points south and north of the Harbour Bridge), the only realistic route is via the CBD.
If there’s a price penalty for journeys passing through or originating/terminating in the CBD it’s just more of an incentive for people to drive. It’s already pretty marginal on price for a lot of trips for public transport vs driving.

Not really, it’s not the same thing if the radial trip costs about the same as it does today, but the crosstown trip or local trip is discounted in comparison. Having the fidelity of the inner zone is what lets you make the one zone trip cheaper.

One thing to note on the map above is that the city zone is surrounded by orange zone, such that if you go from say Smales Farm to Ellerslie you’re still only paying a two zone fare, or in other words you’re paying the same as someone going from Smales Farm to the CBD. You’re not getting penalised for the fact that you have to take a bus through town in that case.

I disagree that trip via the CBD should be charged more, especially if it is faster. The CRL will generate a lots of trips through the CBD.
Are the zones for the (weekly/monthly) passes or also for single trips?
The Paris or Munich network have more rings / zones, but these make only a difference to commuters with weekly or monthly passes or if you leave the city. Inside the city boundaries you have only one zone for trips!! This keeps it much simpler for occasional users / tourists and you can reduce the numbers of zones, merge at least city and inner zone.

Additionally Munich has a short trip ticket, if you take the bus just a few station or e.g. if you tag off before 15 min. you pay a reduced fare.

These Aussie and Canadian cities of which you speak, what are their median incomes? It’s not just about whether the fares are comparable, but whether they’re comparable relative to incomes. When I did a similar exercise against Vienna, their monthly passes were a far lower fraction of median income than Auckland’s.

We’re a low-wage economy, and our public transport fares need to be reflective of that.

The old APT model was built from survey data that showed price didn’t matter at all for most users. The surveys split riders into choice and captive or those who could use another mode versus those who couldnt. The elasticity for choice customers was almost perfectly elastic and for captive by definition perfectly inelastic. That meant you could have doubled the price and the captive people had no option but to pay but virtually all the choice riders changed mode. When you think it through it is a damned good reason why PT should not be privately owned or run only for profit otherwise you end up with a monopoly exploiting poor people and the elderly.
My view is that since PT use has a strong positive external benefit then we should aim at one fare for the whole urban area. If someone travels a long way on a bus they are removing one long distance trip by a car. The external benefit of that is higher than removing one short car trip. Of course the bus system would go broke so that is what road pricing should be for. To prop up PT in all its forms.

I quite like the proposed zones. But I think they should do away with all the monthly and other passes and just have single fares (on and off peak) with a daily cap (probably set at slightly less than a return peak journey). Keep it nice and simple for everyone, and encourage people who do use PT into work to use it at other times (as they have already paid the max daily fare).

If you only have a maximum daily fare, why would you be encouraged to use public transport for trips at weekends, though? Sure you might use it for things in the evening (if the timetable improved late-night services), but if you’re just going to have to pay more for a weekend why wouldn’t you drive since parking is frequently free and there’s much less congestion?

A weekly or monthly maximum is definitely a good idea. One of the great perks of having a commute pass like I used to in Japan (apart from your employer paying!) is that travel is unlimited on the set route any day of the week during validity. This encourages PT use on the weekends and evenings, as well as for short work trips during the day.

It’s also another of the little benefits that can tip people towards regular and sustained PT use, and all the other (health, being able to own one less car in the family, reduced congestion, etc.) benefits that can spring from it. Caps/unlimited commute passes/any tool to achieve the same effect really are a good thing.

Good point, I didn’t think of that! I guess you need a weekly cap too. My main point is that there shouldn’t be a need to do anything in advance, HOP should automatically give you the best possible fare.

You pay more for the via CBD trip in the first graphic. It’s not at all clear that this is a disadvantage to the fare system, because the more expensive trip is longer and presumably incurs more cost on AT. What is a problem is that you can pay more for an interchanging trip than a single seat trip, which isn’t good.

“It’s not a penalty for going through the CBD, it’s a discount for not going there.
” shouldn’t Matt then get a discount for going “contraflow” from the CBD to Takapuna, since he’s using a service that would otherwise run empty? Same as the Air NZ does for it’s late night positioning flight from CHC to AKL?

Its actually kind of cool that route choice has finally become an issue. Twenty years ago half the buses went into town, the other half went out of town. You either got on the only bus going your way or you found some other way to make the trip.

I reckon the ferries should be priced according to the equivalent shortest trip you could take in a bus by land. So that would mean devonport and the inner harbour ferries at two zones, upper harbour and half moon bay at three zones and pine harbour, gulf harbour and Waiheke at four.

Shouldn’t Ferry’s be priced at a premium given:
– They are a premium service (some have bars etc)
– They offer time savings (for devonport at least which people will be willing to pay for)
– their operating/capital costs are more (I could be wrong on this one)

Yes, ferries do cost more per passenger than a bus to operate and they don’t offer the economies of scale and capacity of a truly mass market mode such as rail or busways. They also have a fairly large carbon footprint relative to other modes, including the private car.

Other than purely island hopping, in general ferries do well where they offer a substantial time saving compared to cars or buses due to a more direct route, eg Halfmoon Bay and Devonport. This allows for the premium fares to work as a premium service while capturing a useful percentage of the market. And, the distance saving from that more direct route offsets the large carbon footprint.

I don’t think premium counts for anything, if you buy from the bar then thats how you pay for that aspect of the service. Likewise the busway and rail lines could be considered premium, but in most cases any longer distance trip would end up on rail, busway or ferry at some point.

The time savings thing is accounted for by pricing it according to the equivalent circuitous bus trip by land, you pay the same as the longer trip for the speed advantage afforded by the ferry.

The third point is a really significant one, ferries are very expensive to run and can be considered as something of a luxury option. Should cruising in an expensive ferry boat from Beach Haven or Gulf Harbour cost more than catching the bus? If not we are kinda subsidising people to use expensive to provide transport when a cheaper alternative exists in parallel.

I think they must have done similar to what was proposed above, priced compared to the nearest alternative. As there is a bus service which leaves from 300m up the road (most people probably pass the bus stop), for some reason they think they have to set the price the same.

That is despite the fact that bus service during peak hour (the ferry only runs during peak) would not require any subsidy from the rate payer. And to think, that service has been running, in one form or another since the bridge opened, and now AT is subsidising a competitor.

If you really want to see what trip will benefit from the zones described, look at price from New Lynn to Panmure. Currently 2 fares of $4.50 each, so $9 one way! Under the new system will all be within one zone, so probably $3 one way. Guessing this because trips from all the areas at the outer edge of the Inner Zone to CBD cost $4.50, that price will remain constant, while price for travel within a zone be maybe half to 2/3 of this.

If I understand you correctly Matt, you believe the price difference between $5.04 and $8.68 for the same point A to point B journey is unfair. BUT, the proposed zone system will introduce unfairness of fares far more significant than that, due to the zones being narrow but long. Henderson to Albany and Henderson to Britomart are the same distance, but the former will be 1 zone, and the latter 3 zones. So if we want fairness in pricing, the zone system is the least attractive option. Fairness requires distanced-based fares.

But no one loses. People from Henderson to town will pay about the same under the new system, while those going to Albany will get a big discount.
Good reasons for cheaper fares where no trip to the CBD involved, generally free parking outside of the CBD. Also CBD services most expensive as expensive to add capacity.

Those aren’t the final zones, just an idea of concentric circle based zones. Lots of tweaking that can happen to them. In saying that, those doing cross town trips are probably so few and far between that it probably makes almost no difference overall if they get a slight benefit. If the lower fares do help attract patronage to those routes then that’s simply an added bonus.

BTW not saying I disagree with distance based fares although I think there are issues to their implementation and use.

yeh I know, but useful to theorize using those zones. Biggest issues could be for someone traveling say from Avondale to Fruitvale Road, 5 minute trip train crosses zone boundary, so need to find solution for that. Could have a $2 for less than 3km fare?
Also not sure could let someone from Glen Eden to Albany to travel within 1 zone, maybe split that zone at Upper Harbour.
As for cross-town trips yes few at the moment using PT to do this, but lots of driving trips. Partially because of ridiculously high fares unless you are on the 007. With new network and smart fares could be good patronage boost.

Why would it be $12, don’t get charged twice for the inner zone. Should cost $6 via either direction, because only start and end zones matter. Should be key principle that you get charged same no matter which way you use to get there.

No, it’s not just start and end zones that matter. Any other zones you pass through along the way also get charged for. Otherwise New Lynn to St Heliers via Britomart would be cheaper than just New Lynn to Britomart.

I originally thought that was the case, but it was Nick R who wrote in another post that all zones you pass through are counted.

If you’re right, then the proposal is a farce. Imagine two people boarding a bus at New Lynn and going to Britomart. One of them tags off and gets charged for two zones. The other boards another bus and goes much further, to St Heliers, where they tag off and only get charged for one zone. Stupid eh?